InterContinental Hotel Profit Rises, Revpar Drops
- 2019 Pretax profits: $542 million from $482 million in 2018
- Revenue jumped 7% to $4.63 billion
- Revenue per available room - one of the key metrics in hotel industry, fell 0.3%
- “We opened a record number of rooms, including our best ever performance for the Holiday Inn Brand Family,” says CEO Barr
InterContinental Hotels (IHG) announced a rise in pretax profits for 2019 from $482 million to $542 million on a year-to-year basis. Moreover, the net profit has increased from $349 million to $385 million on the back of the “successful execution of its strategy”.
“Our performance in 2019 reflects the continued successful execution of our strategy, with the investments we’re making in our brands, owner offer and enterprise capabilities accelerating net room openings and supporting sustainable long- term growth,” said Keith Barr, Chief Executive Officer.
The owner of Crowne Plaza and Holiday Inn brands also reported a revenue increase of 7%, from $4.34 billion to $4.63 billion. Finally, the company announced a 10% hike in final dividend, which is set at $125.8 cents.
“Led by strong demand for our established brands, we opened a record number of rooms, including our best ever performance for the Holiday Inn Brand Family, and we increased our share of signings in key markets globally.”
Shares of the company opened 2.1% lower following the earnings announcement, before the bulls managed to erase losses and bring back the IHG stock to trade in green.
Despite the fact that IHG beat both profit and revenue estimates, one of the key metric components in the hotel industry – Revenue per available room (revpar) – dropped 1.8% in the fourth quarter to contribute to an overall decrease of 0.3% on a yearly basis.
The company cited unrest in the Middle East and weaker corporate demand in the UK as main reasons behind the slowdown. Although the revenue per available room fell 4.5% in Greater China, where the group operates 447 hotels in total, the impact of coronavirus is yet to be fully assessed.
“Given the ongoing impact of coronavirus following the outbreak in China, our top priority remains the health and safety of our colleagues, guests and our partners on the ground, and we are doing all we can to support them at this difficult time,” added Barr.
Intercontinental Hotels is considered to be one of the five largest hotel groups in the world.
